FHA vs Conventional

[SubPrimeME]

I have read a lot posts regarding FHA- and the consensus is 3 year waiting post foreclosure- even if it's included in the BK. (correct me if I'm wrong)

How about a standard conventional mortgage- how long post foreclosure does one have to wait?

edit: Does the county hold the info on when the foreclosure hit? The lender?

[StartingOver08]

Others may jump in with more experience. From what I have seen the guidelines are longer, 4 yrs if you have a short sale, or foreclosure. Most of the conventional loans are sold to either Fannie Mae or Freddie Mac and therefore follow their guidelines. If the loan is a portfolio loan, then naturally the guidelines are whatever the bank/lender has under their portfolio requirements.

This is what Fannie Mae has right now, due to be updated April 30, 2010 https://www.efanniemae.com/sf/guides...10/sel1005.pdf

What is important is that the lower the LTV, the greater chance you have for approval in a shorter timeperiod. Also re-establishment of your credit is critical to the approval process as they will no longer accept "thin files". Please note, that this criteria is changing rapidly - so who knows what it will be in a year or even with the next update.

I posted the link above, but if you are really interested go to www.efanniemae.com and look up all the information they have posted about their guidelines/servicing etc, about 1200 pages!

[SubPrimeME]

Others may jump in with more experience. From what I have seen the guidelines are longer, 4 yrs if you have a short sale, or foreclosure. Most of the conventional loans are sold to either Fannie Mae or Freddie Mac and therefore follow their guidelines. If the loan is a portfolio loan, then naturally the guidelines are whatever the bank/lender has under their portfolio requirements.

This is what Fannie Mae has right now, due to be updated April 30, 2010 https://www.efanniemae.com/sf/guides...10/sel1005.pdf

What is important is that the lower the LTV, the greater chance you have for approval in a shorter timeperiod. Also re-establishment of your credit is critical to the approval process as they will no longer accept "thin files". Please note, that this criteria is changing rapidly - so who knows what it will be in a year or even with the next update.

I posted the link above, but if you are really interested go to www.efanniemae.com and look up all the information they have posted about their guidelines/servicing etc, about 1200 pages!

OK I am so confused. I have no clue if the foreclosure happened in/while/after the BK. All I know is it was part of the BK.

So just for fun if it was in the BK, do I wait two years post discharge, in which my case it was 2/09 so I would be ready for the mortgage 2/11 via FHA or 2/12 via FHA per the foreclosure rules.... ugh.

Thanks!

[goingcrzy]

FHA guidelines are: (min)

2 years after bk
1 year after short sale if current on the mortgage
2 years after delinquent short sale
2 years after foreclosure - when the bank takes possession. I have seen a few people where the bank takes over up to a year after bk.

Conventional seems higher, but depends on the bank. Some are following FHA guidelines, other are more conservative.

I would assume at some point FHA guidelines will loosen even more to reduce the inventory.

Good luck!

[krielly]

For FHA - 3 year wait if property was foreclosed or surrendered in BK.
The clock starts on the foreclosure date (when the bank actually takes title), not the surrendered date.

[StartingOver08]

Well, just to confuse matters further Fannie Mae is now offering incentives to lenders for a short sale AND will allow the homeowner to get a mortgage after 2 years rather than 4 if they have a short sale rather than a foreclosure. http://agentgenius.com/real-estate-n...ver-foreclose/

Look for Fannie Mae, Freddie Mac and FHA to continue to change the rules!

Your timeline starts when the deed is conveyed to the bank/new owner. So if you are discharged and you surrendered your house in BK but you are still the owner of record, the clock has not started yet since the property is still in your name.

[SubPrimeME]

huh so I found this on my property lookup:
CRTST CERTIFICATE OF TITLE - STANDARD
9/18/09

so does that mean the clock started on 9/18/09

AND if so...

FHA is 3 years from here
and conventional is anywhere from 3+ years?

It sounds like 20% down is standard no matter what.

Thoughts?

[SubPrimeME]

And according to the county the sheriff sale was 7/24/2008 and it was sold then... so what date does one go by?

[Flamingo]

huh so I found this on my property lookup:
CRTST CERTIFICATE OF TITLE - STANDARD
9/18/09

so does that mean the clock started on 9/18/09

AND if so...

FHA is 3 years from here
and conventional is anywhere from 3+ years?

It sounds like 20% down is standard no matter what.

Thoughts?

What you need to do is contact a broker and find out your options so that you can plan accordingly. You need to realize that for some people, that BK can pose a big problem and for others it does not. Unfortunately, some folks post on here how easy it is to get a mortgage or credit card after discharge and then postings come in asking "how on earth did you do that?" because they cannot. You will find out that you probably will not be able to get a conventional mortgage for quite some time and anything offerred to you will be at a higher rate - in the past those subprime mortgages would have been offerred. FHA might work with you but you will also be subject to PMI included in your payments for the first five years of your loan (since you will be a risk).

Best of luck to you.

[StartingOver08]

Actually Flamingo, MIP (that's what it is called for FHA mortgages) is standard on all loans. AND, right now FHA does not have risk based pricing when you go directly to a lender. The MIP is because the max LTV is now 96.5%, so you only have to put down 3.5% down if your credit score is 620 or greater. FHA says 580, but most of the lenders require a min 620 score.

For conventional loans, naturally there is risk based pricing and the min after BK is 20% down.

Your advice about using a mortgage broker is correct - or go directly to the lender. Shop your mortgage brokers very, very carefully. Especially in still declining markets like Fl, AZ, CA, NV.

[SubPrimeME]

thanks everyone, I have a good broker that I am working with, so I will report as to what occurs.

In the meanwhile my wife and I are in a much better place financially and are able to put away 35% of our income now into savings. With that money in a couple years we will have the 20%.

[SubPrimeME]

***Update***

SO here is the deal as of this post:

My Foreclosure date is the day of the Sheriffs sale. This is the day on my credit report that shows the 'closed' on date. This was 7/2008- this is the date that the underwriter is going to use as the 'foreclosure date'

My BK chp7 discharge did not occur until 3/09.

So what does this mean:

To qualify for a FHA mortgage I must wait 3yrs from the sheriffs sale, or 2yrs from the BK discharge date.

So the earliest I can get a FHA mortgage is 7/2011- pending everything is going well otherwise credit, down payment etc.

Now for a Conventional mortgage, the foreclosure is part of the BK, so you must wait 4yrs from the date of the discharge- in my case 3/09- so I can get a new mortgage 3/13. (lenders may vary, but I spoke with 3 and they were all 4 years)

I hope this helps people understand the differences and what and what a foreclosure does with a BK.

[mhman]

***Update***

SO here is the deal as of this post:

My Foreclosure date is the day of the Sheriffs sale. This is the day on my credit report that shows the 'closed' on date. This was 7/2008- this is the date that the underwriter is going to use as the 'foreclosure date'

My BK chp7 discharge did not occur until 3/09.

So what does this mean:

To qualify for a FHA mortgage I must wait 3yrs from the sheriffs sale, or 2yrs from the BK discharge date.

So the earliest I can get a FHA mortgage is 7/2011- pending everything is going well otherwise credit, down payment etc.

Now for a Conventional mortgage, the foreclosure is part of the BK, so you must wait 4yrs from the date of the discharge- in my case 3/09- so I can get a new mortgage 3/13. (lenders may vary, but I spoke with 3 and they were all 4 years)

I hope this helps people understand the differences and what and what a foreclosure does with a BK.

Thank you so much for the good info.

However, most of the people who filed ch7 will have the dischage date way earlier than forecloure one.

In California, sometimes it would even take more than 18 months to be foreclosed, e.g., Foreclosure = 15+ months after Discharge.

In the past, someone summarized that the "Discharge Date" (not "Foreclosure Date") will be used as the decision factor for FHA or Conventional loans.

Am I understanding wrong?

[HHM]

Where is it on OUR FORUM that says it is a discharge date that is relevant when there is both a discharge and a foreclosure so I can DELETE that post and avoid the confusion. Heck, even some of the information in this thread is incorrect.

FHA
2 years from BK discharge
3 years from Foreclosure, Delinquent Short Sale.

If you have BOTH a foreclosure and BK, it is the 3 years from the foreclosure sale date, period.

Conventional financing is longer, it is 4-5 years depending on the program.

[SubPrimeME]

Where is it on OUR FORUM that says it is a discharge date that is relevant when there is both a discharge and a foreclosure so I can DELETE that post and avoid the confusion. Heck, even some of the information in this thread is incorrect.

FHA
2 years from BK discharge
3 years from Foreclosure, Delinquent Short Sale.

If you have BOTH a foreclosure and BK, it is the 3 years from the foreclosure sale date, period.

Conventional financing is longer, it is 4-5 years depending on the program.

I believe I was saying the same thing. But ya, there shouldn't be any confusion on how long you need to wait.

So if one goes with a FHA mortgage, has 20% down, do you still carry PMI, or is there a variation of this one has for FHA?